Fraser Institute

Debt-financed government spending—even with low interest rates—imposes real costs on Canadians and the economy

VANCOUVER—Contrary to what many Canadians, and interestingly some policymakers and even economists think, debt-financed government spending has real economic costs, even when interest rates are very low, finds a new study by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank. “There is no free lunch when it comes to debt-financed government spending. Even with record low interest rates, there are real costs imposed on the economy and Canadians,” said Bev Dahlby, a senior fellow with the Fraser Institute and co-author of The Fiscal Costs of Debt-Financed Government Spending.

Annual Indigenous spending expected to reach $35.5 billion in 2026, largely due to judicial settlements

VANCOUVER—The federal government’s recent substantial increase of Indigenous spending is mainly due to judicial settlement payouts, finds a new study published by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank. “At a time of large budget deficits and mounting debt, the explosive growth of Indigenous spending is expected to continue, driven largely by settlement payouts,” said Tom Flanagan, professor emeritus at the University of Calgary, senior fellow at the Fraser Institute and author of Indigenous Spending in Budget 2022.

Ottawa's plan to reach zero plastic waste by 2030 will have virtually no effect on the environment, but will impose high costs on Canadians

VANCOUVER—Earlier this week, the federal government announced the first phase of its plan to reach zero plastic waste by 2030, which will have little to no environmental benefit while imposing a large financial cost on Canadians, finds a new study published by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.  "Canada's contribution to the global issue of aquatic plastic pollution is virtually non-existent, but banning plastic—almost all of which is properly disposed of in Canada—will impose high costs on Canadians and will actually result in more waste being generated," said Kenneth P. Green, senior fellow at the Fraser Institute and author of Canada's Wasteful Plan to Regulate Plastic Waste.

Canada second highest debt accumulator (as a share of the economy) out of 33 countries from 2019-21

VANCOUVER—Canada experienced the second highest increase in its total debt relative to the size of the economy (GDP) from 2019 to 2021 compared to 33 industrialized countries, behind only Japan, finds a new study published by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank. “Despite Canada’s comparatively high debt accumulation during the pandemic, which many argued would result in strong economic performance, we actually underperformed most of our peers,” said Tegan Hill, economist at the Fraser Institute and co-author of The Accumulated Debt and Economic Performance of Industrialized Countries during COVID.

Today is Tax Freedom Day—when Canadian families start working for themselves

VANCOUVER—Today—Wednesday, June 15—Canadians celebrate Tax Freedom Day, the day in the year when they start working for themselves, not government, finds a new study published by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank. Tax Freedom Day measures the total annual tax burden imposed on Canadian families by federal, provincial, and municipal governments. This year, it comes four days later than in 2021, when it fell on June 11. This is the latest date it’s been over last 15 years.

Federal interest costs will increase—perhaps substantially—if interest rates continue to rise

VANCOUVER—As the Bank of Canada seeks to reduce inflation by increasing interest rates, interest costs on government debt—including federal debt—will also rise, finds a new essay published today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank. “While the federal government continues to borrow money to fund high levels of spending, the cost of servicing Ottawa’s growing debt is poised to increase if interest rates continue to rise,” said Philip Cross, former chief economic analyst at Statistics Canada, senior fellow at the Fraser Institute and author of Low Interest Rates and the Cost of Government Debt.

Canada is only one of six industrialized countries (out of 28) that doesn't have cost-sharing; introduction could improve Canadian health-care

VANCOUVER—Among 28 industrialized countries in the world with universal health-care, Canada is only one of six that does not use any form of cost-sharing for core medical services, which can be used to incentivize more efficient use of scarce health resources and potentially reduce wait times, finds a new study published by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank. Despite ranking amongst the most expensive universal health care systems in the developed world, comprehensive measures of performance indicate that Canada routinely lags behind its international peers in key metrics of health care performance, such as the availability of doctors and hospital beds, and wait times for medically necessary care.

Canada risks European-like energy crisis if similar policies continue to be pursued

VANCOUVER—Europe’s current energy crisis should serve as a cautionary tale for Canada as the federal government is pursuing the same set of policies that has led to skyrocketing energy prices in Europe, finds a new study by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank. “The current energy crisis in Europe predates Russia’s invasion of Ukraine, and is largely the result of self-inflicted wounds brought about by unsound energy policies—policies that the Canadian federal government is also pursuing, which could lead to similarly disastrous results in Canada,” said Robert P. Murphy, a senior fellow with the Fraser Institute and co-author of Can Canada Avoid Europe’s Energy Crisis?

Shrinking ratio of Canadian workers to seniors will strain government finances in coming years; only 3 working age individuals for every senior by 202

VANCOUVER—As Canada’s population ages, the number of working-aged Canadians relative to the number of seniors has declined from 5.4 in 2000 to 3.4 in 2022, which means government spending related to demographics is increasing at the same time that the growth in tax revenues is declining, finds a new study by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank. “Workers pay the bulk of taxes, which governments need to fund important services, including health care and income transfers to seniors. As the relative number of seniors grows, and the relative number of workers declines, government finances across Canada will be put under increasing strain,” said Ben Eisen, senior fellow at the Fraser Institute and co-author of Understanding the Changing Ratio of Working-Age Canadians to Seniors and Its Consequences.

Reforming the Indian Act to facilitate Indigenous property rights key to increasing First Nations entrepreneurship

VANCOUVER—The federal government could improve First Nations entrepreneurship, which is key to prosperity, by further removing barriers to property rights within the Indian Act, finds a new study published by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

Continued government deficits jeopardize economic recovery

VANCOUVER—As the height of the COVID-19 pandemic passes and temporary support programs wind down, governments in Canada should be moving aggressively towards balanced budgets and even surpluses to pay down debt rather than continuing to borrow, finds a new essay released by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank. The essay notes that the federal government recorded a $327.7 billion deficit in 2020-21 and a deficit of $113.8 billion in 2021-22. This is 27.8 per cent larger than the deficit incurred in the aftermath of the 2008-09 recession despite a strong recovery.

Reforms needed to improve student testing in most provinces

VANCOUVER—Provincewide testing of K-12 students in most provinces could be improved by ensuring the tests are consistent, transparent, and count toward students’ grades or academic progression, finds a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank. “The decline of standardized testing in Canada has reduced the availability of important data that’s essential to understand how our education system performs and how to best help students improve,” said Paige MacPherson, associate director of education policy at the Fraser Institute and co-author of Testing Canadian K-12 Students: Regional Variability, Room for Improvement.

Justin Trudeau a modern-day socialist?

Over time, the meaning of socialism has changed and evolved. Its technical definition remains state ownership of the means of production – namely factories, machinery, etc. For the most part though, there are very few socialists who now advocate for the government to nationalize industries.

Support for national dental care, pharmacare and $10-a-day daycare drops to 4-in-10 Canadians (or less) when tax increases are included, poll finds

VANCOUVER—Support plummets to well below half of Canadians for new federal government programs, including dental care, pharmacare and $10-a-day daycare when the taxes needed to pay for them are included, finds a new Leger poll commissioned by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank. All three programs were included or committed to in the recent federal budget.

Raising an extra dollar of personal income tax revenue costs the Canadian economy $2.86

VANCOUVER—For an additional ($1) dollar of personal income tax revenue collected by the federal government, $2.86 is lost in economic activity because of less investment, less entrepreneurship, less spending and other behavioural changes that shrink the tax base, finds a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

Government policies discourage older Canadians from continuing to work

VANCOUVER—If governments in Canada want to help seniors who want to continue working, they should remove barriers that discourage them from remaining in the workforce, finds a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank. “All Canadians, no matter their age, should be free to make their own choices about working without government limiting those choices or essentially penalizing those who want to work,” said Morley Gunderson, professor emeritus of economics at the University of Toronto and author of Barriers to the Labour Force Participation of Older Workers in Canada.

Medical wait times cost Canadian patients almost $4.1 billion in lost wages last year

VANCOUVER—Long waits for surgery and medical treatment cost Canadians almost $4.1 billion in lost wages and productivity last year (2021), finds a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank. Preliminary data suggest that an estimated 1.4 million patients waited for medically necessary treatment last year, and each lost an estimated $2,848 (on average) due to lost wages and reduced productivity during working hours.

Inflation in Canada—the causes, consequences and beneficiaries

VANCOUVER—The Bank of Canada this week raised its interest rate to combat inflation, which has reached levels not seen in decades, and yet the causes, consequences—and crucially, the beneficiaries—of inflation remain largely unknown to many Canadians, argues a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

Saskatchewan second most attractive jurisdiction worldwide for mining investment; Quebec and Yukon also in global top 10

CALGARY—Saskatchewan remains Canada’s top-rated jurisdiction for mining investment, finds a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank. “The Fraser Institute’s mining survey is the most comprehensive report on government policies that either encourages or discourages mining investment, and Saskatchewan remains not only the top choice in Canada, but second overall globally,” said Elmira Aliakbari, director of the Fraser Institute’s Centre for Natural Resource Studies and co-author of the study.

Ottawa can’t finance large spending programs by only taxing upper-income families, eventually middle class must also pay

VANCOUVER—If the federal government, which plans to table its next budget this week, wants to fund a major expansion of government, it simply can’t raise enough tax revenue solely from Canada’s upper-income families, finds a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank. “To generate sufficient revenue to significantly increase federal spending, Ottawa must raise taxes on Canadians across a broad income spectrum, not just top earners,” said Ben Eisen, senior fellow at the Fraser Institute and author of No Free Lunch for the 99 Per Cent: Estimating Revenue Effects from Taxes on Top Earners.